QUESTION: Can
our common interest development own and
operate a credit union or bank for the benefit of the
homeowners?
ANSWER: Your
association's articles of incorporation establish the purpose for
your corporation. Running a credit union is
probably not one of them. As a result, if your board set up a credit union
it would likely be an
ultra vires act
unless the membership amended your articles to allow for it.
Ownership &
Taxes.
There may be laws regarding who
may and may not own a credit union. You need to
talk to a lawyer who specializes in banking law. You
better talk to tax specialist as well since income from business operations will be taxed
differently than membership dues. Finally, who would
run the credit union? It's tough enough running a
homeowners association. A credit union would be another source of potential liability. Gives me the
willies just thinking about it.
ASSISTANCE: Associations needing legal assistance can
contact us.
To stay current with issues affecting community associations, subscribe to the
Davis-Stirling Newsletter.